Survey: Marketing directors and agencies need more flexible arrangements

by Jeremy Lee, Marketing 18-Nov-08, 09:40

LONDON - Deals between advertisers and their agencies are too rigid and inflexible and do not allow for the changing scope of requirements, thereby leading to conflict between the two parties.

That's according to research from The Observatory International, which received a response to a questionnaire from more than 90 marketing directors. The result of this conundrum is that advertisers feel that they are not getting great value from their agencies while the agencies are constantly bemoaning that their margins are wafer thin. What is of particular concern is that this situation looks set to get worse as marketing budgets are cut given recessionary pressures.

According to The Observatory's research, this situation has arisen because often agencies are being asked to cost against a scope of work that is not specific enough and that they therefore cost against an insufficient picture and invariably under-quote.

Given that advertisers need flexibility with their activities - particularly so when market conditions are tough - there needs to be greater flexibility that includes caveats in so both parties are clear on what can potentially happen during the course of the year. Moreover, agencies need to price their offers at a realistic rate rather than attempt to undercut each other.

Key to this is clearer brief writing and ensuring that it is given the appropriate attention and resource rather than be giving to a junior person. The Observatory estimate that this could produce savings of up to 25%. Finally, evaluation needs to be given to agencies that is both clear and concise.

Stuart Pocock, managing partner, The Observatory says: 'If agencies don't understand the ground rules, the chances are, they won't get it right first time.'